WASHINGTON—Top Senate leaders said they were within striking distance of an agreement Monday to reopen the federal government and defuse a looming debt crisis just days before the U.S. could run out of money to pay its bills.

Senate Majority Leader Harry Reid (D., Nev.) said on the Senate floor that the leaders had made "tremendous progress" toward a deal and that he was hopeful Tuesday would be a "bright day." The Senate's Republican leader, Mitch McConnell of Kentucky, seconded Mr. Reid's optimism. "We've had a good day," he said.

The White House postponed a planned afternoon meeting of congressional leaders with President Barack Obama, saying the schedule change would give Senate leaders time to hash out a deal.

The latest proposal would reopen the government at current spending levels until Jan. 15 and extend the federal borrowing limit until early February, according to aides familiar with the talks. Lawmakers also would begin longer-term negotiations on the budget, with the task of reaching an agreement by Dec. 13.

Even before the deal was unveiled, it provoked grumbling Monday night among restive House Republicans.

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Mr. McConnell said Monday he expected to "get a result that will be acceptable to both sides."
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By setting up yet another series of fiscal deadlines, the agreement, if embraced, would carry the hallmark of other deadline-driven deals that have become typical of the increasingly polarized Capitol.

As of Monday night, Senate leaders said they were within striking distance of a deal to sidestep a debt crisis and reopen the government, and a mid-afternoon meeting with President Obama was postponed so talks could continue. Jerry Seib reports. Photo: AP.

"Everybody realizes that whatever happens, we're going to be litigating this another day," said Sen. John Thune of South Dakota, a member of the Senate GOP leadership.

Still, a deal would mark a major breakthrough in the impasse that has gripped Washington for weeks, shutting federal agencies and threatening the government with a debt default.

Stock prices, which have been sensitive to turns in the saga, showed modest gains Monday, with the Dow Jones Industrial Average rising 64.15 points, or 0.42%, to close at 15301.26. Bond markets were closed for the Columbus Day holiday.

In Asia, shares rose early Tuesday on optimism for a deal.

The proposed agreement's framework included no major alterations to the 2010 health-care law that Mr. Obama championed and congressional Republicans have tried to curtail.

However, lawmakers appeared to be weighing some minor changes, including new procedures to verify the incomes of some people receiving government subsidies for health-insurance costs.

Lawmakers also appeared to be considering delaying for a year a fee of $63 per insured person levied on those who offer policies, including employers, unions and insurance carriers. The likely beneficiaries of the fee would be traditional insurance carriers, which are required to sell policies to everyone, regardless of medical history, and so could see customers incur major bills. Large employers and unions that provide coverage say the levy is unfair and they can't afford it, and have fought for an exemption.

One point of tension was whether the deal would include a limit that Republicans want to place on "emergency" powers that the Treasury has used to extend past debt-ceiling deadlines and avoid falling behind on the nation's bills. The dispute is significant enough that Mr. Obama raised it in a phone call Monday with Mr. McConnell, two people familiar with the call said. The Treasury department, under both Republican and Democratic administrations, has used these powers for decades to extend the amount of time the government can continue borrowing money and making payments at times when the nation has hit or neared its debt ceiling but Congress hasn't yet extended U.S. borrowing authority.

Republicans say limiting those powers would ensure that the next debt-ceiling extension is a hard deadline. But Treasury Secretary Jacob Lew has been adamant that Treasury needs the powers to maintain flexibility, in part because of how uncertain debt ceiling votes can be in Congress, two people familiar with the matter said.

Republicans who entered the budget battle determined to gut the health law have steadily scaled back their demands in the face of Democratic resistance. Still, many could find it hard to accept the Senate proposal, especially if it makes no changes to the health law.

Some House Republicans would likely resist the deal, putting House Speaker John Boehner (R., Ohio) in a tight spot.

Mr. Boehner could face a rebellion from the House's most fiscally conservative lawmakers, many of whom were elected with tea-party support. That would force Mr. Boehner to rely on Democrats to pass the Senate measure.

The lack of immediate spending cuts, as well as the absence of major changes to the health law, could prompt conservative opposition.

Many House Republicans declined to comment until they saw the final Senate proposal. Some still were smarting from Mr. Obama's decision to end discussions with them on Friday, which effectively sidelined the House GOP and accelerated talks in the Senate. The House offer abandoned many of the GOP's initial policy demands. It would have raised the debt ceiling for six weeks without making other policy changes. But it didn't appear to contain any explicit agreement to reopen the government immediately.

"We believed that we could have worked with the president," said Rep. Pete Sessions (R., Texas) "and then the president dropped us like a hot potato."

The potential Senate deal would do nothing for now to solve one of the biggest fiscal issues dividing the two parties: potential adjustments to the across-the-board spending cuts known as the sequester, another round of which are due in January. By funding the government only until that point, lawmakers would give themselves time to discuss changes.

First established as part of a 2011 budget deal to avert an earlier debt crisis, the sequester's next reductions would cut annual spending to $967 billion from the current $986 billion. Both parties consider the sequester a blunt budgeting tool.

Republicans want spending to fall to the level dictated by the sequester, but favor making the cuts more targeted or replacing them with savings extracted from health and safety-net programs. The GOP is particularly concerned that military spending will bear the biggest brunt of the January cuts. Democrats have sought to eliminate the scheduled cuts in part by bringing in more revenue.

Sen. Bob Corker (R., Tenn.) said that both parties will be motivated to revisit the issue before the cuts take effect. Creating pressure for lawmakers to reach an agreement by then "could bring people to a place where we solve this problem and put in place the mandatory reforms that are better for our country," he said.

Mr. Obama, speaking to reporters Monday while visiting a food and family services charity in Washington, warned that "if we don't start making some real progress both in the House and Senate…we stand a good chance of defaulting, and defaulting would have a potentially devastating effect on our economy."

The Treasury says that by Thursday it will have just $30 billion in cash left to pay bills, which would last only a week or two.

Some Republicans have argued that the party should take steps to reopen the government quickly. Many fear that the shutdown has hurt the party's image and say the GOP should move to shift the debate to deficit reduction, where public support is stronger.

"This has been a disastrous experience for the Republican Party,'' said former Sen. Judd Gregg (R., N.H.). "It is marginalized us with the American people and made us look like we don't care about governing.''

Some Republicans didn't want to reopen the government until talks with Mr. Obama had started on long-term fiscal issues. Others wanted the government to remain closed until they had extracted concessions from Democrats on the health law. It was unclear how they would react to the Senate's proposal to open the government immediately and fund it through mid-January.

The talks between Messrs. Reid and McConnell began in earnest Saturday with their first meeting since the partial government shutdown started Oct. 1. The negotiations continued over the weekend with a phone call between the two leaders on Sunday and a meeting in Mr. McConnell's office earlier Monday.

The Senate discussions arose after talks between House Republicans and the White House hit an impasse late last week. A bipartisan group of roughly a dozen senators had been working on a plan that formed the initial framework for the Senate leader's talks.

All this talk about the Senate deal is for naught. Th house will not buy into a sell out. The cost to the Republicans for doing what's right for the country has been too high for them to give up the fight to cut spending. And for those of you ready to pounce on the fact that this started over obamacare guess what. It is part of the excessive spending by this feckless administration.

The US has perpetually defaulted on debt since the founding of the Federal Reserve Bank. Inflation is called the "gentleman's default". America has never paid back the value it borrowed, always with greatly reduced value currency.

What this country badly needs is a common sense, uniting force in the White House, not a vindictive, petty dilletante with a creepy streak. But democracies have their flaws and in the end voters deserve what they get.

Dingy Harry + RINOS = bad deal for the USA. All they want to do is kick the can to January, which gives them plenty of time to devise a politically expedient scheme to kill the Sequester, which is their goal. There will be ZERO spending cuts in this deal, and some minor, irrelevant BarryCare modification fig leaf.

I have always thought that the battles between political parties in D.C. are nothing more than stage shows used to induce our ‘sentiment’ and entertain us by giving us a good fight to watch.

The “deal” to delay the $63 fee paid by employers, unions, & insurance carriers delays the benefit to insurers who now must provide insurance to people regardless of medical history. What a threat to their prognosis for survival! This convinces me that the war on Capitol Hill is nothing more than a stage show. We are heading to universal healthcare, whether we like it, or not. And, the GOP is cooperating, albeit in ways that make us think a real fight is going on.

I am not suggesting that employers, unions, & insurance carriers should pay the fee. Doing so just perpetuates the current problem wherein Americans are not aware of capitalistic behaviors within the enterprising healthcare community to inflate the healthcare bubble. It keeps Americans unaware of employers’ reasons for flooding compensation packages with alleged benefits to avoid CORPORATE FICA taxes paid into social retirement plans on workers’ behalves while employers ‘justify’ slower wage growth because of growing costs of a ‘benefit’ that enables corporations to avoid the tax. The fee will cause corporations to constrain wages more, further impoverishing non-elites & threatening the social retirement plans they necessarily rely upon, yet I presume employers will get a tax deduction for this new “legitimate” business expense. So, I am in favor of delaying this fee, not just for a yr, but permanently.

I think it would be far better to charge individuals the $63 fee. But, this would hurt Americans who are already hurt by the corrupt tax code constructed by Congress and acted upon by employers who choose to feed the healthcare bubble instead of paying higher FICA-taxable wages. Another fee just makes matters worse, that is, UNLESS employers INCREASE wages enough that after paying FICA taxes and ordinary income taxes too, workers have the $63 in their OWN pockets to pay it. Are employers likely to do that? HECK NO! They will not VOLUNTARILY pay the company-match FICA tax into social retirement plans on workers’ behalves by bumping up wages enough that workers could pay it. Why? Because though they complain about the growing cost of insurance, employers enjoy the FICA tax exemption for compensating workers with ‘benefits’ instead of wages or salary. And, Congress cannot force employers to pay higher FICA-taxable wages.

Our biggest financial problem is the corrupt tax code. It needs many changes, and we should begin now! The bipartisan “deal” on Capitol Hill should revise the code, and Congress DOES have jurisdiction over that! Congress should abolish the FICA AND ordinary income tax exemptions permitted for “perks” or benefits that give business tax deductions but pass individual benefit to employees. This would include corporate jets, company cars, housing & food allowances when workers travel “on business”, etc. as well as employer-sponsored health insurance, life insurance policies, and death benefits from policies purchased by corporations on workers and executives. The tax code should account for, and tax, all of these things at the individual level. Yes. This increases FICA taxes for BOTH, workers & employers. Yes, this requires workers to pay ordinary income taxes on “perks” currently exempt from taxes. So, in offset, Congress should reduce marginal ordinary income tax rates for everybody, including wealthy Americans and corporations however not so much that the change in tax rates is revenue-neutral for the federal government. The GOP should agree to higher collective tax revenues (FICA and ordinary income taxes) so that we can reduce government’s need for borrowing. But, these higher taxes should happen in exchange for govt downsizing that cuts federal spending & minimize taxes for everybody in the long-term.

Don't hold your breath. Recent experience suggests that Mr. Obama will come up with an 11th hour demand that will throw a wrench in the works. I don't think he is interested in solving anything. He likes the fight and the media attention it causes.

The word "Leader" in various forms shows up 13 times in this Article. A very sinister man in the 1930's said "Think of the press as a great keyboard on which the government can play.” Is the media being played so magnificently as to create an air of subjugation of the Citizen to the Elected Representative's? I was taught that they worked for us, was that wrong?

Here's something to consider: If the USA defaults on it's interest and principal payments on T Bills, notes and bonds, the holders of those securities are going to seize US property. That means CHINA will be taking possession of what? The White House, the Capitol? maby all of Washington DC. Maybe that's not such a bad outcome

If publicly goaded, Boehner could easily have a “mega tantrum”. If described as “stupid”, with such a personality would mount an almost impenetrable intellectual defence. If undermined in front of an audience, with his intellect undermined, Boehner could be prone to “narcissistic rage”.

Boehner seems to me to be self-centred two-year-old in an adult body. Prone to wanting everything – now! If not, then he has a two year-old’s tantrum.

Good morning, Greg! I still have not been able to get an answer to a vexing question and perhaps you would oblige?

We are a substantially larger nation geographically and demographically than in 1783. And I believe we'd agree we live in a substantially more complex and varied world as well. Given that our population and variety of needs and concerns continue to grow, and given that the public and private sector are intertwined and that the private sector continues to under perform by choice and due to lower than anticipated consumer demand, why are increased debt and spending by the government (a) problematic or (b) the President's "fault"?

Gareth, as you are no doubt aware, the debt ceiling addresses the funding available to meet obligations already incurred. If we fail to pay our debts in a timely manner we run the risk of (once again) having our credit rating downgraded thereby increasing costs on future debt and calling into question the full faith and credit of the nation - given we have a fiat currency not a wise thing to do.

Greg, you do realize that there are folks with immense wealth who pay not a nickle in Federal taxes thanks to their lawyers and accountants. Would you care to disenfranchise the folks who write the checks that get Tea Party folks into Congress?

Bill, the Sequester is a ham-fisted way of cutting expenditures as both parties realize. As for spending cuts? If they are truly as important as you seem to feel they are, then have your Congressional district voluntarily whack 25% of federal expenditures in district, and encourage all GOP districts to follow suit through 2016, and let's get those spending cuts going....

Tad....You are correct....The article provides the point... One point of tension was whether the deal would include a limit that Republicans want to place on "emergency" powers that the Treasury has used to extend past debt-ceiling deadlines and avoid falling behind on the nation's bills. The dispute is significant enough that Mr. Obama raised it in a phone call Monday with Mr. McConnell,

Any form of constitutional check and balance will not be allowed by the King. The only exception to the King's mandate are those he grants.

Thank you zamos, wonder where you have been of late, you have the proud distinction of being the WSJ most deleted poster, please practise your charm offensive and drop your childish name calling and stop acting like a gay boy,wondering are you actually gay?

As well nice to see you have slowed down here too. On your "birther views “insisting Obama was born in Kenya, and you plead a case that insists his Hawaiian birth notice is a fake, planted as part of a plot to smuggle a Black Muslim Socialist, Communist Kenyan into the White House.

Stephen, you mean China as mortgagee in possession of the entire USA this could be awkward when they discover that most Americans only have debt too ,and most of their homes have little or no equity --the health care costs are 50%-60% higher than any comparable Western Country costs,there will be short administration period followed by the mother of all fire sales.

The sole goal of the Tea Party is to do whatever it takes to destroy the Obama presidency.Somehow that might be considered un-American.The ACA would be acceptable to the Tea Party if it had been put forth by a Republican president.....

Yes my wife would like to visit Grand Canyon and Washington DC and see all the monuments. But what would happen if one of the Park Rangers clubbed us for looking at closed parks and monuments? Could we sign up quickly and get Obamacare? Would our Medicare cards get us emergency treatment? What if we couldn't leave and return home?

Stephen, I tried that too, but couldn't make it. Mexico, then Brazil, then Uruguay, then Ecuador. It's no better in those places than here, in Brazil and Mexico it's decidedly worse. Well, I might consider going back to Ecuador. Cuenca is beautiful, marvelous climate, somewhat but not overwhelmingly cheaper than the US.

Stephen,please stop whining you have even more ghetto's to deal with since this lacklustre GOP leadership .

On the eve of George w teary exit this mess left behind.“In 2008, 91.6 million people—more than 30 percent of the nation’s population—fell below 200 percent of the federal poverty level. More individuals lived in families with incomes between 100 and 200 percent of poverty line (52.5 million) than below the poverty line (39.1 million) in 2008. Between 2000 and 2008, large suburbs saw the fastest growing low-income populations across community types and the greatest uptick in the share of the population living under 200 percent of poverty.”http://www.brookings.edu/research/papers/2010/01/20-poverty-kneebone#

I am more of an American than the Kenyan who occupies the White House. Look at the bright side of a Chinese run USA. All those ghetto types and incarcerated criminals in America will suddenly be employed...making Nike tennis shoes and the like; if they refuse to work they become a source of organ transplants. All the stupid EPA rules and regulations will be tossed out. You all might be better off. Myself? I sold everything and left the USA at the end of 2004 before the cultural wars went nuclear.

You're pathetic barrold. You have been here for hours spamming the same drivel over and over 7,8,9 posts per page adnauseum. Do you ever sober up and think wow I made a fool outta myself last night.

Your friends and family all illiterate? You don't worry that they might read your drivel and have you committed? Do they have a Baker act in Bangkok? Or do they have lives outside a bulletin board half a world away.

Don't try to convince us you are down under all your links are posted from your IP in Thailand.

Factually incorrect post. While most Americans do have debt, it is only a small percentage of people who have homes with little or no equity. I know a surprisingly large number of people who have paid off their mortgages and with the current low interest rates, those who can have refinanced with 10 year notes with rates in the low 3% rate.

As far as health care costs in the US, one of the main reasons that the costs are so high is the amount of research and technical advances in the medical fields that comes from the US. We end up paying for that R&D and people in Australia and the like get the benefit from that R&D.

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